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Financial due diligence can involve dozens, or even hundreds, of document requests across financial statements, debt, tax, cash flow, and other areas. An Excel checklist gives deal teams a simple way to organize those requests, assign ownership, and track what has been received, reviewed, or remains outstanding.
In the context of a debt financing, financial due diligence is the process a lender or its advisors use to check a borrower’s financial records, statements, and existing obligations before extending a facility. The goal is simple: confirm the borrower’s numbers are accurate, check whether it can afford the proposed debt, and catch any risks, like hidden liabilities or inconsistent reporting, before the facility closes.
This usually means looking at past financial performance, existing debt, and how much cash flow is available to support new or additional debt. It’s a narrower, more focused check than a general financial health review, aimed specifically at whether the borrower can handle the facility being discussed.
In a debt financing, financial due diligence is generally categorized by who is running the process and at what point in the facility’s life:
The checklist itself doesn’t change dramatically between these categories, but the emphasis does. A lender reviewing a new facility weights debt schedules and cash flow coverage more heavily than a lender reviewing a routine amendment to an existing one.
A financial due diligence checklist needs the same set of columns on every row. At minimum:
Column | What it captures |
|---|---|
Item number | A sequential ID so each request can be referenced easily |
Category or section | Groups items by financial sub-type, such as Debt, Tax, or Working Capital |
Document or request name | The specific file or piece of data being asked for |
Status | A fixed dropdown (Not Started, In Review, Received, Waived, Complete) rather than free text |
Priority | High, medium, or low, so the most deal-critical items stand out |
Assigned owner | The person responsible for chasing down or reviewing that item |
Notes or red flags | Space to record discrepancies, missing data, or follow-up questions |
A financial due diligence checklist for a debt financing typically covers these core categories:
For debt financing specifically, add one more category: covenant and reporting documentation, covering any existing compliance certificates, financial covenant definitions, and reporting history if the borrower already has debt outstanding.
Structure the checklist as a request tracker rather than a static list. The value comes from being able to see, at a glance, what’s been requested, what’s been received, and what still needs review.
Status and risk flag should be tracked separately. A document can be marked “Received” but still flagged amber if something in it raises a question, which is a distinction a single combined status column would lose.
A financial due diligence checklist for a debt financing is mostly a structured list rather than a calculation-heavy model, but a few formulas make it considerably more useful for tracking a live lender review.
Formula or ratio | How it’s calculated | What it’s for |
|---|---|---|
=COUNTIF(StatusColumn, “Received”) | Counts every row marked as received | Quick progress check without counting rows by hand |
Conditional formatting | Tied to the status or risk flag column | Highlights red, amber, or green automatically as documents come in |
=SUMIFS(…) | Adds up a number tied to each item, filtered by category | Rolls up totals like outstanding debt by facility, straight from the checklist |
Debt-to-EBITDA | Total debt ÷ EBITDA | Standard leverage measure |
Debt service coverage ratio (DSCR) | Cash flow available for debt service ÷ total debt service due | Shows whether the borrower generates enough cash to cover the facility’s payments |
Fixed charge coverage ratio (FCCR) | (EBITDA − capex − taxes) ÷ (interest + scheduled principal payments)[the exact FCCR definition is set in the credit agreement] | A common covenant metric worth checking early, not just at testing time |
Current ratio | Current assets ÷ current liabilities | Basic liquidity check, flags short-term cash problems regardless of overall leverage |
These ratios aren’t part of the checklist itself, but calculating them as soon as the statements are received turns the checklist from a document tracker into an early warning system for whether the facility makes sense at all.
A generic financial due diligence checklist works as a starting point, but the categories that matter most shift depending on the borrower’s industry and the type of facility being financed.
For asset-based lending, the checklist should weigh collateral documentation heavily: accounts receivable and inventory detail, borrowing base calculations, and any existing liens. For cash-flow or unitranche facilities, the emphasis shifts toward EBITDA quality and recurring revenue, since repayment depends on the business’s ongoing cash generation rather than a specific pool of assets.
Borrower industry shapes diligence priorities on top of that facility distinction:
Borrower industry | What a lender specifically checks |
|---|---|
Software / technology | Recurring revenue (ARR or MRR), customer retention and churn, and any IP or licensing agreements that affect value if the lender ever needs to rely on collateral |
Distribution / industrials | Equipment condition and depreciation schedules, supply chain dependencies, and the physical collateral available to secure the facility |
Healthcare | Regulatory and licensing documentation, payer mix or reimbursement risk, and compliance history specific to the sector |
Business / consumer services | Contract-based or recurring revenue mix, customer concentration, and margin consistency across service lines |
The practical challenge is that most teams rebuild this checklist from scratch for every new deal type, rather than keeping one base checklist that adjusts by facility type and industry.
Termgrid is a purpose-built deal management platform for private capital markets. If a financial due diligence checklist is being run as part of a debt financing, its Deal Execution module gives the documents that checklist requests a dedicated home, through a built-in data room, instead of tracking them through spreadsheets and email attachments.
For deal teams already running their process on Termgrid, the checklist and the documents it points to live in the same place as the rest of the deal, rather than as two separate systems that have to be reconciled by hand.
See how Termgrid’s Deal Execution module works or request a demo to walk through it with a member of the team.
It’s the process of checking a borrower’s financial records and past performance before a loan is finalized. A lender does this to confirm the numbers are accurate and to make sure the borrower can actually afford the debt being discussed.
At minimum: category, document requested, status, owner, and a risk flag. Bigger deals often add a notes column and a date column, so it’s clear when each item was asked for and when it came in.
Use a fixed dropdown list, like Not Started, In Review, Received, Waived, or Complete, instead of typing status in free text. This keeps the column consistent, so it’s easy to filter and count as documents come in.
Yes, Excel can handle as many rows as you need. The harder part is keeping one version up to date once more than one person is working on it, which is why a shared file and clear ownership matter more than the number of rows.
COUNTIF to count how many items have been received, conditional formatting to highlight risk flags automatically, and SUMIFS to add up numbers like total debt by facility directly from the checklist.
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